Attawapiskat’s accounting problems not unusual among First Nations communities

OTTAWA — For three years, auditors warned the chief and council of a First Nations reserve that they were problems with how the band kept its books. Missing or incomplete documentation and even a lack of an annual budget were flagged, and the auditors even used the same lines in letters to the Attawapiskat First Nation band council in 2009, 2010 and 2011.

Yet the accounting problems at the reserve – highlighted by yet another audit released Monday – are present on other reserves nationwide, whose books are “all over the map,” according to one former aboriginal affairs minister.

As well, the department charged with overseeing how billions in federal funds to reserves are spent continues to fall short in providing proper financial oversight, as the audit released Monday showed.

It all comes at a politically sensitive time for Crown-First Nations relations, with a grassroots movement known as Idle No More organizing more demonstrations daily; Prime Minister Stephen Harper set to meet with First Nations leaders on Friday; and the chief of Attawapiskat, Theresa Spence, who is currently on a hunger strike, lashing out at the timing of the latest audit, saying its release was meant to “discredit” her.

A series of audit letters accountants filed annually to Attawapiskat show that in 2009, 2010 and 2011, Attawapiskat failed to provide supporting documentation for spending in many instances. The documents were released to Postmedia News under the access to information law. Audit notes from 2009, 2010 and 2011 audits show that when accountants asked for an explanation, “often, none could be provided.”

Over the same time period, audits also found that the senior officials on the reserve failed to even set a yearly budget and that payroll cheques were being printed without proper oversight from the band council, cheques that would have covered Spence’s salary and travel expenses in 2010-2011 of more than $71,000.

The most recent audit – made public Monday – found that going back to April 1, 2005, the band council didn’t properly prepare budgets, didn’t properly keep minutes to support band council resolutions, had “incomplete, insufficient, and inaccurate bookkeeping,” made “expenditures … without the available funds” and added that “journal entries were made with no supporting documentation.”

The latest audit of the Attawapiskat First Nation, which covers about 80 per cent of the more than $104 million funneled to Attawapiskat since 2005, included numerous entries in band council books such as a May 2, 2011 donation of $10,000 and more than $1.1 million in August 2009 to buy “buildings” with no supporting documentation. There was also a $2.3 million expenses payment to an unknown vendor on March 31, 2008 with incomplete documentation to explain how or why the money was spent.

“There are a good number of them, like Attawapiskat, that it just seems to be difficult to do the basics, and then that raises red flags in the community and for the government,” said Chuck Strahl, who served as aboriginal affairs minister in the Harper government from 2007 to 2010.

“It’s not an anomaly, but it’s not fair to say that’s the way they all are,” he said in an exclusive interview with Postmedia News. “Some do (have problems), but many, many are very competent.”

Strahl believes there are ongoing accountability issues with funding and program delivery in some First Nations communities and a need to better demonstrate that federal dollars are being spent wisely.

Adding to the problems at Attawapiskat were the oversight failures from Aboriginal Affairs. The audit found that Aboriginal Affairs’ own policies on housing were ambiguous enough that it was difficult for the department to “adequately review or challenge the information reported” by the band council. Nor were the department’s regional offices required to “explain or provide context for performance reports” to head office in the capital region.

“Just because First Nations communities publish audits, it does not mean money is well spent,” said Sen. Patrick Brazeau, a controversial and outspoken critic of on-reserve spending. “Where does the money go? Is it being properly spent … and more importantly, is it going to the people who have needs?”

The department has a responsibility to fulfil its oversight mandate, said Brazeau, who has said he wanted an evaluation of how the department accounts for the money spent on-reserve. However, “accountability is a two-way street,” he said, and the leaders of First Nations reserves in financial crisis should hold final accountability for decisions.

The release of the audit, which the department said was not politically motivated, forced Spence to answer uncomfortable questions about the spending in her community, which was thrust into the national spotlight in late 2011 over revelations of substandard housing conditions for more than a dozen families.

The band council was also warned repeatedly about the housing situation on the reserve, with Health Canada inspections going back to 2010 showing mould and inadequate housing for several families in the remote community north of Timmins, Ont. A Health Canada official noted the band had done a “relatively poor job” addressing recommendations from health inspectors.

“Case in point — families are still living in ‘condemned’ homes years after the fact. Whether that’s because of funding or other considerations, I can’t really say,” reads a Nov. 30, 2011 Health Canada email, released to Postmedia News.

In February, 22 modular housing units arrived in the community at a cost of $2.5 million for construction and transport.

According to Aboriginal Affairs and Northern Development Canada (AANDC), Spence and the band council discussed the results of the most recent audit in a teleconference on Sept. 20. The department’s deputy minister signed off on the audit on Oct. 16.

“The independent audit from Deloitte and Touche LLP speaks for itself, and we accept its conclusions and recommendations,” said Jan O’Driscoll, a spokesman for Aboriginal Affairs Minister John Duncan.

Between April 1, 2005 and Nov. 30, 2011, about $104 million in total funding was provided to Attawapiskat. About $8.3 million of that was for housing, including $6.85 million for housing maintenance, $1 million for housing needs immediately and $450,000 for housing renovations under federal stimulus spending.

Spence was not answering questions Monday and reporters weren’t allowed into the camp where she has spent her days on Victoria Island in the Ottawa River, blocks away from Parliament Hill. Instead, Spence, who is on a hunger strike, put out a written statement Monday afternoon, saying the audit was “no more than a distraction” meant to “discredit” her.

Spence has said she gave up solid food on Dec. 11, subsisting on a liquid diet of medicinal tea, fish broth and vitamins, and was willing to starve herself to death if Harper didn’t meet with First Nations chiefs immediately to discuss treaty issues. Her actions have made her the public face of Idle No More, which was formed by aboriginals upset with the changes the Harper government made to the Indian Act and environmental reviews in its budget bill, C-45.